Centrica reveals its £14bn boost to UK economy

Centrica is to reveal that it contributes more than £14bn to the British
economy in taxes, jobs creation and thousands of contracts with small and
medium-sized suppliers across the country.

Centrica hopes that the report will head off criticism over the company's profits, which are set to show an increase this week. Household gas bills have also risen this year, following increases in the wholesale gas price.Photo: Andy Rain

In a first for the energy giant, which operates British Gas, it will publish an economic impact report on its business in the UK.

The report, by Oxford Economics, will say that Centrica contributes £14.1bn to the economy – equivalent to the size of the economy of a city such as Manchester. The report also claims that Centrica provides £4.2bn in "total tax payments" including its own payments to HM Revenue and Customs of £1.1bn, national insurance and PAYE contributions from its staff and tax paid by consumers on their bills.

Centrica hopes that the report will head off criticism over the company's profits, which are set to show an increase this week. Household gas bills have also risen this year, following increases in the wholesale gas price.

Centrica's full-year results are expected to show that profits have increased by 15pc to £2.77bn. Centrica will make it clear that only 20pc of the group's business is based on British Gas and that the reason for the increase is because the division sold 12pc more gas in the UK in 2012 compared with 2011, which was a milder year.

Profit margins have reduced and only 5pc of the household bill is paid to Centrica as profit, the company will point out.

Increasing profits have mostly been driven by acquisitions in America and Norway, which have started returning cash to the business.

Sam Laidlaw, the company's chief executive, is also expected to announce that Centrica is interested in opportunities in shale gas.

It is thought that Centrica is looking at possible partnerships or small-scale acquisitions in the United States, particularly where prices for assets have fallen after reductions in gas prices.

Although Centrica is exploring a link with Cuadrilla, the British business "fracking" for shale gas in the Blackpool area, it is believed that the company does not see a huge shale business in the UK.

The Government announced a moratorium – since lifted – on fracking activity to search for shale gas after some minor earth tremors were reported.

Mr Laidlaw is also thought to believe that there is no imminent pressure for bills to rise again despite the forward price for gas for delivery next winter being higher than the present wholesale price.

There is concern, however, that continuing upward pressure on green levies could mean householders paying more.

Centrica's assessment comes as business leaders disclose increasing concerns that "anti-business" rhetoric is growing in Britain. Following controversy over taxes paid by foreign companies in the UK and arguments about pay to senior banking figures, business leaders feel that they are not being supported as they search for new growth opportunities.

"This study shows how companies like Centrica are an engine for sustaining and stimulating growth," Mr Laidlaw said. "At a time of uncertain economic prospects, our activities across the UK are even more important to secure employment, put the supply chain to work and contribute our fair share of tax."

The report said that Centrica supported 174,000 jobs in the country and purchased goods and services worth £9.4bn from more than 6,000 businesses.

Adrian Cooper, chief executive of Oxford Economics, said: "By generating tax revenue, supporting jobs and stimulating economic activity along its supply chain, the impact of Centrica's activities is shown to extend well beyond its core function of delivering a secure energy supply to businesses and consumers across the country.

"Our research clearly demonstrates the significant contribution that a large and successful British company can make to the economy as a whole, especially the job market and the UK's public finances."

Critics of Centrica said that the report would hold little sway with consumers who were worried about bills increasing.

Richard Lloyd, executive director of Which?, said: "At a time when spiralling energy bills are consumers' top financial worry, people are bound to question whether they're paying a fair price for their energy when they see big profits announcements from the energy giants."